Same problem here. The s-ata harddisk had a Debian "etch" with lvm installed 
before. To figure that out I booted Knoppix and erased the partition table with 
'dd if=/dev/zero of=/dev/sda bs=1M count=1'. Nevertheless I'm still unable to 
use "Guided - Use entire disk and setup LVM".
I'm installing via PXE, kernel and initrd are taken from 
"ubuntu-7.10-server-amd64.iso".
Could at least someone use the automated lvm setup w/o problems?

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Installing to HDD with previous ubuntu fails to create fresh LVM claiming group 
already in use
https://bugs.launchpad.net/bugs/154086
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